Question: Eighteen months ago Barry Shelton won a 2 million Maryland
Eighteen months ago, Barry Shelton won a $2 million Maryland state lottery jackpot and chose to receive it as $120,000 annual annuity for the rest of his life. This year his brothers persuaded him to sell the annuity to a ﬁnancial institution for $1.79 mil-lion and invest the sales proceeds in a new family business. How much gain did Barry recognize on sale of his annuity, and is it ordinary income or long-term capital gain?
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